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By that definition of fraud (asking investors for cash repeatedly to not run out before turning a profit), many unicorn-status companies are fraud. It takes a l

by clnq 3y ago

By that definition of fraud (asking investors for cash repeatedly to not run out before turning a profit), many unicorn-status companies are fraud. It takes a long time to become profitable and I don’t see a problem if it’s not said that the company is.

gjsman-1000 3y ago
Original writer here again. There is a difference here though, which is that those companies openly tell investors, "we're not profitable," and even have projections in their documentation for when they will be profitable assuming current growth continues. For example, Disney+ warns investors that it is not a profitable business but is trying to get to the point of profitability by the end of 2024. They also have regular public financial statements clearly outlining exactly how much revenue they received, expenses they paid for, and profits received if any. Now, sometimes these projections are... very optimistic like Spotify; but they are still there and check many legal boxes. Unprofitability is not a concern if it is disclosed. Basically anything is OK if there is clear and full disclosure. Purism does not have a disclosure anywhere saying whether this is, or is not, true. You are just left to assume that the company is solid, happy, and solvent without much substance that I could find (not even the most basic Profit/Loss statement), unless I missed some obvious documentation.
- clnq 3y ago
  Hmm, that assumption or expectation can be very disappointing. Perhaps that is a part of why you feel so negatively about Librem? I would assume that most companies of that size have some sort of financial concerns, challenges or problems in the near to mid future. Do they publish financial statements to their investors or prospective investors? Perhaps it would be useful to ask for those and see for yourself. If they mislead investors through not providing statements or playing games with the numbers, then you have evidence (!) — something that would strengthen your article a lot.
  - deleted 3y ago
    [deleted]
newaccount74 3y ago
Usually "investment" implies that you give money to a company so they can cover up front costs (such as tooling costs, r&d costs etc) that will allow them to profit later. The idea is that a certain amount of money now will allow them to make a profit later by selling whatever product the investment allows them to build. But that doesn't seem to be the case here. Reading between the lines, it sounds like Purism lacks the funds to fulfill the preorders that have already been paid, and the "investment" will just go into fulfilling existing orders. There is little potential for future profit, and instead it just sounds a bit like a ponzi scheme, where they have to keep finding new people to invest in the company.
- clnq 3y ago
  The term 'investment' holds different meanings depending on the context. For instance, in macroeconomics, 'investment' refers to the addition of capital stock to an economy, which closely aligns with your description. This can involve the incorporation of equipment, buildings, or infrastructure, and is generally anticipated to promote economic growth. The notion that investment capital is spend on something productive in the long-term applies here, but not so much in other contexts. In sociology, 'investment' often means the expenditure of time or energy into a cause or relationship. In personal finance, 'investment' pertains specifically to the use of financial instruments or products. Overall, 'investment' can mean many things; there isn't really one thing it usually implies. In the context of business and finance, 'investment' indicates the allocation or transfer of money/resources. However, this doesn't necessarily lead to the acquisition of any assets other than the money itself. For example, I could invest capital into my own company without immediately allocating that money to specific uses — it could just sit in the corporate bank account. The funds could eventually be used in a variety of ways. While it's both morally and ethically commendable to inform investors about the intended uses of their investments, there's no definitive principle stating that such investments must be allocated to specific items like tooling, R&D, and the like. I understand why people who think that investment implies that would be disappointed by Librem's actions here. But from a business perspective, investing into fulfilling past orders is fine, it still adds business net worth and investor value. Many large companies like Tesla do it, too. It is not a Ponzi scheme unless the previous investors are directly paid dividends from new investors. A Ponzi scheme is a very specific term. Many businesses operate in a way in which investment grows the business, and this growth pays dividends to previous investors. That could be seen as a Ponzi-like scheme from some perspectives, but it would be a bit contrived, as this is how many highly-leveraged businesses operate.

by clnq 3y ago

gjsman-1000 3y ago

Original writer here again. There is a difference here though, which is that those companies openly tell investors, "we're not profitable," and even have projections in their documentation for when they will be profitable assuming current growth continues. For example, Disney+ warns investors that it is not a profitable business but is trying to get to the point of profitability by the end of 2024. They also have regular public financial statements clearly outlining exactly how much revenue they received, expenses they paid for, and profits received if any. Now, sometimes these projections are... very optimistic like Spotify; but they are still there and check many legal boxes. Unprofitability is not a concern if it is disclosed. Basically anything is OK if there is clear and full disclosure. Purism does not have a disclosure anywhere saying whether this is, or is not, true. You are just left to assume that the company is solid, happy, and solvent without much substance that I could find (not even the most basic Profit/Loss statement), unless I missed some obvious documentation.

clnq 3y ago
Hmm, that assumption or expectation can be very disappointing. Perhaps that is a part of why you feel so negatively about Librem? I would assume that most companies of that size have some sort of financial concerns, challenges or problems in the near to mid future. Do they publish financial statements to their investors or prospective investors? Perhaps it would be useful to ask for those and see for yourself. If they mislead investors through not providing statements or playing games with the numbers, then you have evidence (!) — something that would strengthen your article a lot.
- deleted 3y ago
  [deleted]

newaccount74 3y ago

Usually "investment" implies that you give money to a company so they can cover up front costs (such as tooling costs, r&d costs etc) that will allow them to profit later. The idea is that a certain amount of money now will allow them to make a profit later by selling whatever product the investment allows them to build. But that doesn't seem to be the case here. Reading between the lines, it sounds like Purism lacks the funds to fulfill the preorders that have already been paid, and the "investment" will just go into fulfilling existing orders. There is little potential for future profit, and instead it just sounds a bit like a ponzi scheme, where they have to keep finding new people to invest in the company.

clnq 3y ago
The term 'investment' holds different meanings depending on the context. For instance, in macroeconomics, 'investment' refers to the addition of capital stock to an economy, which closely aligns with your description. This can involve the incorporation of equipment, buildings, or infrastructure, and is generally anticipated to promote economic growth. The notion that investment capital is spend on something productive in the long-term applies here, but not so much in other contexts. In sociology, 'investment' often means the expenditure of time or energy into a cause or relationship. In personal finance, 'investment' pertains specifically to the use of financial instruments or products. Overall, 'investment' can mean many things; there isn't really one thing it usually implies. In the context of business and finance, 'investment' indicates the allocation or transfer of money/resources. However, this doesn't necessarily lead to the acquisition of any assets other than the money itself. For example, I could invest capital into my own company without immediately allocating that money to specific uses — it could just sit in the corporate bank account. The funds could eventually be used in a variety of ways. While it's both morally and ethically commendable to inform investors about the intended uses of their investments, there's no definitive principle stating that such investments must be allocated to specific items like tooling, R&D, and the like. I understand why people who think that investment implies that would be disappointed by Librem's actions here. But from a business perspective, investing into fulfilling past orders is fine, it still adds business net worth and investor value. Many large companies like Tesla do it, too. It is not a Ponzi scheme unless the previous investors are directly paid dividends from new investors. A Ponzi scheme is a very specific term. Many businesses operate in a way in which investment grows the business, and this growth pays dividends to previous investors. That could be seen as a Ponzi-like scheme from some perspectives, but it would be a bit contrived, as this is how many highly-leveraged businesses operate.